GBP/USD falls towards 1.2000 as the dollar climbs higher
Cable is now down to a low of 1.2021 on the day and is looking towards another test of the 1.2000 level. The low yesterday touched 1.2001 before bouncing back a little.
A firm break below the figure level this time around could trigger stops on the way down for cable, towards the September low of 1.1959 potentially.
The figure level appears to be a key area that may be defended - layered bids and potential barrier at play (would not be surprised if there is talk of one) - for now but the unrelenting pressure in the dollar could be too hot to handle if maintained.
In terms of daily resistance, there is the 2017 low @ 1.1986 and the 2019 low @ 1.1959, followed by the post-Brexit referendum low in 2016 @ 1.1841.
It is quite stunning that we are actually starting to talk about those levels when just over a week ago, cable was trading above 1.3000 still.
There is good reason to expect short covering and buyers to lean on these levels, but considering the momentum over the past few days and the economic situation across the globe, it is not wise to dive in with both feet in my view.
It is certainly temping to try and bet on a bounce from historically low levels like what we are seeing now, but unless the near-term picture or market sentiment shifts dramatically, I would say keep stops tight and for those short, no better time to scale out a little more.
